The sad truth is that lenders, their lawyers, and many Scottsdale foreclosures scammers out to exploit people facing foreclosure, benefit from the fact that most homeowners usually know nothing about the foreclosure process or what rights they have. Did you know that almost 95% of Florida homeowners do nothing to defend their foreclosure suit? Unfortunately, this is the quickest and most certain way to lose your home or investment property.
You Have Rights
The first and most important thing to know if you are facing foreclosure is that you have rights, both in and out of the courtroom. Foreclosure in Florida is a civil lawsuit, and just like any party to any other lawsuit, you have legal rights meant to protect you. Plus, lenders and their agents must be licensed, and have to comply with a complex scheme of local, state, and federal laws and regulations that are designed to protect you, the borrower. It is quite possible that the protections afforded to you as a litigant and your rights as a borrower can help you to defend your home. But you must take action in order to assert those rights.
Lenders Make Mistakes
Lenders make mistakes. Attorneys make mistakes. Common mistakes include:
- Missing signatures on important documents
- Lost paperwork, including the original note or gaps in assignments (watch out for “re-establishment” claims in your paperwork, as this is an important clue that may mean your lender has lost important documents necessary for foreclosure)
- Missed deadlines or failure to file required documents
- Incomplete/Inaccurate Truth In Lending Act disclosures (which may even give you the opportunity to rescind the loan)
- Hidden fees or illegal interest rates (usually rare, but it happens!)
- Failure to properly credit Borrower payments
Mistakes can prevent the lender from being able to foreclose on your home, give you a viable counterclaim to assert against the lender, or even allow you to rescind your loan. And mistakes are not as uncommon as you may think. In the heyday of lending, many loans were auto-processed then packaged into securitization pools and sold on the open market. This means loans were transferred anywhere from 1 up to 8 or 9 times! When you understand the context in which many of these loans were made, it’s easy to understand how there are so many missing assignment or lost notes.
In the current foreclosure crisis, lenders’ attorneys handle very large case loads, often for small flat fees, and are extremely overwork. These conditions are conducive to missteps, small errors, and larger mistakes that can have the effect of prolonging the foreclosure processes or stopping the foreclosure process altogether. When homeowners don’t fight, or don’t know how to fight back, it makes the lawyers’ jobs much easier. If more and more homeowners decided to stand up for their legal rights, these lawyers would have to start working much harder, making it even more difficult to keep up with the necessary paperwork and deadlines in every case. The current model works well when most homeowners are unaware of their rights and don’t fight back. It is in a lender’s best interest to foreclose on your home as quickly and easily as possible. This will not happen if you fight the foreclosure.
It Takes A Long Time To Foreclose On Your Home If You Defend The Foreclosure
Defending your foreclosure can ease the time pressure you may be feeling right now. Foreclosure can be a very quick process – from filing to auction in as little as 45 days – if the homeowner doesn’t bother to contest the case. But when there are legitimate legal defenses, the court needs time to figure everything out. The courts are extremely back up due to all the foreclosure cases on the docket.
It’s common for homeowners to remain in their homes for a year or more (even up to three years is possible) while defending the foreclosure. The time it takes to fight your foreclosure can be all the time you need to refinance, negotiate a work-out or modification, or sell your home on your own terms to avoid foreclosure altogether. And you should know, foreclosure attorneys are also often able to negotiate with the lender to waive deficiency judgments. If nothing else, defending the foreclosure takes the immediate time pressure off you while you work toward a solution.
What Your Lender Really Wants
Is money, not your house! Banks aren’t property managers, or in the real estate ownership business. Plus, they already are stuck with an extremely large housing inventory that’s difficult to move in the current market. If you can convince them that you will give them more money. Than they would get in a deeply discount foreclosure auction, then you may be able to keep your home. Plus, Floridians have what is call a “right of redemption” – which means you can pay off your loan balance. And keep your home at any time before the foreclosure sale. The time you get by defending your foreclosure may be enough. To allow you to redeem your house, or negotiate a modification.
Many Contested Cases Settle
As I mentioned above, the bank’s primary goal throughout the entire foreclosure process is to get one thing: money. Owning your home and having to sell it at a steep discount does not help them reach this goal. Many cases settle before sale through: negotiation of the terms of the loan (modification or refinance); finding a qualified buyer, getting lender approval and moving out on your own terms without deficiency liability (short sale); negotiation for more time to bring the loan current; or finding a loan from someone else to bring the loan current. Nothing helps you get a good settlement more than a willingness to defend your rights.
1. You want to sell your home
Selling your home is a viable option should your only other available solution is foreclosure. If you find yourself in the enviable position of having equity in your home, then this information is NOT for you. These are options for homeowners who are not only facing financial hardship, but also underwater on the value of their home.
In a short sale, the lender and the homeowner agree to sell the home at a price that is less than the remaining value of the loan. Basically, this means the bank accepts a payoff that is less than the amount you owe. The seller/homeowner will need to prepare a financial package for submission to the short sale bank. Each bank has its own guidelines but the basic procedure is similar from bank to bank. You can find a basic outline for the package in the resource section of this article.
Deed in Lieu of Foreclosure
You can avoid the foreclosure process completely in another way, by signing the deed of your property over to the lender. In this case, you are in basic terms giving up ownership of your home. Outside of losing your property asset (which is certainly a not an easy financial decision to make), the advantageous part of this option is that you can potentially walk away from a negative equity investment – a property that is “upside down” on its market value when compared against the money owed on the remainder of the loan. Or simply, you owe more than your property is worth.
There are requirements for a deed in lieu of foreclosure agreement with your bank. You can find more about the requirements in the resource section of this article. Depending upon your loan type, when you complete a deed in lieu of foreclosure, up to $3,000 may be available for your relocation expenses. You may also be eligible for up to $6,000 to help settle obligations such as your home equity loan or line of credit.